Month: June 2014

I’m sure that you have heard entrepreneurs in the Caribbean complain that they have a very difficult time sourcing financing. In fact, a World Bank survey for Barbados found that 41% of small businesses stated that access to finance was a major obstacle for their business, compared to 30% of their counterparts across the world.

Over the years we’ve done a number of studies looking at this problem and I’ve come to believe that no one invests in companies anymore. Does this mean that investors are no longer lending money to businesses? Of course not. Corporate loan growth remains a substantial portion of all loans in the Caribbean. So if investors aren’t lending to businesses, why are corporate loans growing? The answer: investors are lending to people.

Lenders of all types have noted that the main determining factor behind whether a loan application would be approved is their management team. Equity prices have long moved in response to changes in senior management personnel, clearly demonstrating the value that investors place on people.

Yet, small business owners frequently pitch their products and develop business plans that spend very little time demonstrating why their management team is capable of executing the plan. We hire our teams out of convenience, preferring to bring in people who we know rather than taking the time, effort and money to hire the best people for the job. We often don’t develop our own business skills, focusing instead on product development. It is no wonder that investors don’t part with their money, we have not demonstrated that we, not the product, deserve it.